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Test your basic knowledge |
AP Microeconomics
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Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Constant Returns to Scale
Necessity
Negative externality
Demand for Labor
2. Exists at the point where the quantity supplied equals the quantity demanded
Market Equilibrium
Comparative Advantage
Economic Growth
Free-Rider Problem
3. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage
Excise Tax
Price Ceiling
Marginal Product of Labor (MPL)
Accounting Profit
4. The marginal utility from consumption of more and more of that item falls over time
Law of Diminishing Marginal Utility
Perfectly competitive long-run equilibrium
Constant cost industry
Total Welfare
5. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Monopolistic competition long-run equilibrium
Monopolistic competition
Economic Profit
Positive externality
6. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption
Natural Monopoly
Market power
Private goods
Absolute Advantage
7. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received
Marginal Resource Cost (MRC)
Constrained Utility Maximization
Inferior Goods
Price Ceiling
8. The most desirable alternative given up as the result of a decision
Opportunity Cost
Marginal Cost (MC)
Productive Efficiency
Least-Cost Rule
9. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary
Dead Weight Loss
Economic Growth
Absolute Advantage
Cross-Price Elasticity of Demand
10. ATC = TC/Q = AFC + AVC
Opportunity Cost
Inferior Goods
Average Total Cost (ATC)
Free-Rider Problem
11. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials
Non-collusive oligopoly
Variable inputs
Price elasticity
Shortage
12. Ed > 1 - meaning consumers are price sensitive
Marginal Benefit (MB)
Marginal Product of Labor (MPL)
Price elastic demand
Natural Monopoly
13. The rational decision maker chooses an action if MB = MC
Unit elastic demand
Average Total Cost (ATC)
Marginal Analysis
Inferior Goods
14. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Substitution Effect
Unit elastic demand
Economic Growth
Price Elasticity of Supply
15. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK
Constrained Utility Maximization
Economic Profit
Marginal Resource Cost (MRC)
Least-Cost Rule
16. Ei = (%dQd good X)/(%d Income)
Total Product of Labor (TPL)
Income Elasticity
Market Economy (Capitalism)
Spillover benefits
17. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Price elasticity
Explicit costs
Utility Maximizing Rule
Determinants of Demand
18. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Fixed inputs
Comparative Advantage
Utility Maximizing Rule
Total Revenue Test
19. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Monopolistic competition long-run equilibrium
Private goods
Excise Tax
Productive Efficiency
20. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Implicit costs
Market Economy (Capitalism)
Positive externality
Determinants of Supply
21. Entry of new firms shifts the cost curves for all firms upward
Substitute Goods
Increasing Cost Industry
Market Equilibrium
Absolute prices
22. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Public goods
Subsidy
Marginal Resource Cost (MRC)
Break-even Point
23. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Collusive oligopoly
Income Elasticity
Monopsonist
Marginal Productivity Theory
24. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Accounting Profit
Economies of Scale
Dead Weight Loss
Marginal Product of Labor (MPL)
25. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic
Variable inputs
Market Equilibrium
Incidence of Tax
Total Welfare
26. Exists if a producer can produce more of a good than all other producers
Absolute Advantage
Perfectly competitive long-run equilibrium
Producer surplus
Relative Prices
27. A good for which higher income increases demand
Total Welfare
Normal Goods
Income Effect
Oligopoly
28. Models where firms agree to mutually improve their situation
Marginal Cost (MC)
Collusive oligopoly
Law of Diminishing Marginal Utility
Fixed inputs
29. Entry of new firms shifts the cost curves for all firms downward
Income Effect
Total Revenue
Decreasing Cost industry
Determinants of Demand
30. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Long Run
Market Economy (Capitalism)
Marginal Product of Labor (MPL)
Price elastic demand
31. Ei > 1
Increasing Cost Industry
Law of Diminishing Marginal Utility
Dead Weight Loss
Luxury
32. All firms maximize profit by producing where MR = MC
Profit Maximizing Rule
Explicit costs
Total Revenue
Marginal Revenue Product (MRP)
33. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Average Variable Cost (AVC)
Perfect competition
Price elasticity
Surplus
34. Ed = 1
Shortage
Perfectly competitive long-run equilibrium
Unit elastic demand
Determinants of Supply
35. A firm that has market power in the factor market (a wage-setter)
Public goods
Monopsonist
Law of Supply
Resources
36. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Demand for Labor
Scarcity
Natural Monopoly
Luxury
37. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good
Oligopoly
Public goods
Implicit costs
Subsidy
38. AVC = TVC/Q
Law of Increasing Costs
Price elasticity
Average Variable Cost (AVC)
Perfectly inelastic
39. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.
Price inelastic demand
Law of Demand
Monopsonist
Economies of Scale
40. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.
Economic Growth
Absolute prices
Diseconomies of Scale
Normal Profit
41. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Determinants of Demand
Dead Weight Loss
Least-Cost Rule
Non-collusive oligopoly
42. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand
Production function
Substitute Goods
Short run
Determinants of Supply
43. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income
Economic Profit
Law of Supply
Marginal tax rate
Explicit costs
44. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it
Excess Capacity
Marginal Analysis
Free-Rider Problem
Price elastic demand
45. Ed = 8 - infinite change in demand to price change
Least-Cost Rule
Diseconomies of Scale
Perfectly elastic
Constant Returns to Scale
46. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Marginal Benefit (MB)
Total Fixed Costs (TFC)
Perfectly competitive long-run equilibrium
Market power
47. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Decreasing Cost industry
Surplus
Least-Cost Rule
Implicit costs
48. Ed = (%dQd)/(%dP). Ignore negative sign
Producer surplus
Monopoly long-run equilibrium
Substitute Goods
Price elasticity
49. Occurs when LRAC is constant over a variety of plant sizes
Constant Returns to Scale
Economies of Scale
Collusive oligopoly
Demand for Labor
50. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly
Four-firm concentration ratio
Marginal Analysis
Shutdown Point
Non-collusive oligopoly